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Events | 18 Mar 2018

Despite Tax Shortfall, Indonesia’s 2017 Customs & Excise Target Met

indonesia-investments.com, Jakarta – What caused this positive performance? Firstly,
both the domestic and global economy strengthening in 2017, hence import and export activities
rose. This encourages the accumulation of more import and export taxes.

Regarding export taxes, the relaxation of strict export rules in the mining sector contributed
sharply to rising export tax revenue, specifically in the minerals and coal mining sector. For
example, Freeport Indonesia, the local unit of mining giant Freeport McMoran Inc, was
granted a permit to export 1.11 million wet metric tons of copper concentrate until February
2018. Earlier, these exports had ceased due to the strict 2009 Mining Law (that includes a
ban on exports of unprocessed minerals).

Secondly, Indonesia’s cigarette manufacturers were quicker to fulfill their excise obligations
this year. This has a big impact on excise revenue because these cigarette companies are
the biggest contributors to excise revenue (followed by alcoholic beverages and ethyl alcohol).
In 2016 a total of IDR 178.7 trillion was collected in customs and excise revenue, equal to
97.2 percent of the government’s target last year.

Tax Revenue Shortfall in 2017

Meanwhile, up to 29 December 2017, Indonesia only managed to collect IDR 1,132.1 trillion
(approx. USD $84 billion), or 88.2 percent of the full-year target, hence it is basically impossible
to achieve the target (set at IDR 1,283.6 trillion in the Revised 2017 state budget). On
Tuesday 2 January 2018 the Finance Ministry is scheduled to release the final figures.